How To Afford a Renovation: Phasing a Project, Part 1
Everyone knows that construction prices are very high right now, and they're not really going anywhere [see: chronic, decades long labor shortage in the skilled trades; increasing regulation; aging infrastructure; deferred maintenance...] So what happens when you need to renovate your home or property, but the work you need to do far outstrips your budget?
This question comes up almost daily when I'm talking with clients - both in my capacity as an architect and as a consultant - and everyone asks the same question: "how can I phase my project so that it's cheaper?"
I also recently got a message from a reader asking this exact question, and thought I'd follow his suggestion and do a whole article on it. Really, this could be several articles - there are so many things to consider! Here, we'll focus on an extensive home renovation...we'll save extensive capital improvements on investment properties or businesses for a future post.
Let's use this reader's situation as our example. He writes that his elderly family member's house "is perfectly livable, but could use both cosmetic and infrastructural upgrades - they did one kitchen renovation 15 years ago and studiously maintained paint/cleanliness/etc, but have otherwise left the circa-1900 house untouched." He also explains that they've been living in the house for 50+ years, and that to renovate the whole thing [a 3500 sf house in the Bay Area] would be around $3mm in costs.
He then goes on to posit that they could do the basement, "including modernizing plumbing and electric," in 2025, then the first floor in 2030, then the second in 203x, etc.
He's asking specifically if that would be frustrating for an architect to think about a project in this way...and here's my answer:
Not at all - I'm happy to think about phased projects and help clients master plan their renovations. BUT - doing a project in this way would be very unpleasant, expensive, disruptive, and, well, frustrating for the *owner.*
Let's talk about why.
First of all, my ears perk up when I hear "untouched in 50 years" - don't get me wrong, paint and regular maintenance is *huge* and very important, but just about everything else will be at the end of its useful life. Modern HVAC systems have a 20-30 year lifespan, windows/roof/siding will almost surely need to be replaced. Electrical could go either way - if it's well maintained, there's nothing really wrong with older wiring, unless it's got old style fuses, is knob-and-tub, has been hacked at over the last 50 years. It will likely be undersized for modern use [think electric HVAC systems, car charger, etc], and will need to be upgraded to at least a 200 amp service. Plumbing is usually ok, though stuff I look for in an old house that can cause problems include old cast iron wastelines [they last for a long time, but they corrode from the inside - just scope it to see the state of it - including out to the street!], galvanized pipe, hacked up DIY stuff, etc. The fixtures will all certainly have to be replaced.
This is to say nothing of other issues like tile, waterproofing [inside and out], state of the wallboard/plaster, various structural things, insulation, lighting, or design and layout of the house, which would likely need to be updated to support modern life [think: more bathrooms, more open living spaces, larger closets, better storage, etc].
Ok, so that's a big list - what's wrong with doing it floor by floor?
Well, let’s dive in…
Well, anything that's a system [HVAC, electrical, plumbing] doesn't stop at each floor - it's continuous throughout the house, and usually all leads to the basement or a utility room. You have to expose the systems to work on them - as in, remove the drywall/plaster to remove the old and replace with new - which is fine if you're on the first floor and can shoot everything to the basement. But, if you finish the first floor first, now when you do the second floor, you have to....rip up a bunch of walls again to expose the systems again. And so on, with each floor. It's like renovating your whole house 3 times. Horrible and expensive.
So, if we need to replace whole systems, we should gut the whole house all at once, so we can run the systems all at once throughout the house. Once we've got the whole house ripped up, we're going to want to run plumbing to the new bathrooms, frame any new walls needed for said new bathrooms, install all the new ductwork and electrical, etc.
Then, we need all new finishes, because we've ripped everything out and can't put the old finishes back. And so, before you can blink an eye, you're into a whole house gut renovation.
Can you do one floor at a time? Of course. But it will be way more expensive for all the reasons I listed above. Also consider that in many places [Bay Area being at the top of this list], permitting takes a really long time. If you're doing each floor as its own project, each has to be permitted separately. If each permit takes 6-12 months to get in hand before you can start construction, and each project takes 6 months in construction time, and don't forget design time [depending on how much you're doing, at least a few months], time to find and bid contractors, time to secure financing, etc - you're looking at years for each project. If you do a project every 5 years, 2-3 of those 5 years will be spent in the process of doing a project.
I don't know about you, but I don't want to spend 6-9 of the next 15 years of my life with my house ripped up or having to deal with permitting, design, GCs, etc. Of course, the Bay Area permitting situation is one of the more extreme, but the areas where I work in the Boston area, even small towns, it's similar - and it's why I'm always harping on speeding up the permitting process. It is absolutely brutal in many areas - and not just "big cities."
So let's say you're willing to go through all that. Would you save any money? Almost certainly not. The thing is, every time a subcontractor steps on your site, you're being charged for that effort. On a typical project, a plumber might come two or three times: rough-ins, trim-out, and finish/punchlist. The more work he does in each trip, the cheaper "per pound" the work is. If he's doing one bathroom for you, it'll cost X, but it's not 2X to do 2 bathrooms - he's already there, his guys are mobilized for the project, and all his overhead is spread out over more field work.
Think of it this way: if you call a carpenter to install a single shelf in your house [good luck finding a guy who will do just one anyway], he'll charge you at least a half-day's work. He's got to set you up in his system, coordinate the work with you, come to your house to meet you to talk about the project, send an estimate, talk with you about why the estimate is what it is, get the supplies for your project, do the work, send you a bill, answer your questions about the bill, chase you down for the bill, answer your questions a month later when you're having an issue with the shelf...all for probably $100 in profit. Not worth it. He'd rather do a lot more work, where he has to do almost all of the things I listed above, but it's for a much larger project. Instead of doing 1000 shelves a year, he can do 3 big projects a year.
And - while he's working on your big project, and you want to add a single shelf? He may not even charge you for it, because he's already there and mobilized.
So your single shelf can either cost $1000, or be just thrown in the mix of a larger project.
Think of it like buying in bulk - you'll get a much better price on shampoo at Costco than you will buying the same brand of shampoo in sample sizes at CVS.
And here's another factor to consider: moving out.
Many of my clients start out with a romantic notion of living in their home while the project is underway. "We'll just order takeout! We'll build a temporary kitchen in another room! It'll be an adventure!"
The reality is a lot less fun. Construction crews coming in at 7 am, turning off the water/electricity right when you're trying to get yourself and the kids ready for the day; constant noise and dust; disruption of routines. There are also safety issues - old houses are full of lead, old weird mold and dust, bat/mouse droppings, etc - when that stuff gets kicked up in your house, no amount of "dust walls" are going to prevent you from breathing that, day in and day out. Construction sites are also not safe places - there will be holes in the floor, exposed wiring and piping, mess, and all sorts of issues.
So, you could make the guys come at 9 am, so you're out of the house, and you could make them hook the water/electricity back up every night when they're wrapping up, but you're going to pay for that, in money and time. Better to take that money, put your stuff in storage, and keep the project going as fast and smooth as possible.
When I'm talking with a contractor about a potential project, they always ask, with a bit of a concerned look in their eye, "are the owners planning on moving out?" It makes things go so much smoother for the GC...but is a set of logistics and costs most homeowners haven't even considered. No consider doing that multiple times if you're doing a phased project...!
So there you have it, all the reasons phasing is trouble - why it costs more, why it's less efficient, and why those of us who do this every day usually advise against it.
But if you're still here reading, you may be asking - rightly - "fine, that all makes sense, but it still doesn't change the fact that I don't have $3mm for a project *today.* What am I supposed to do, is it really all or nothing?!"
You'll have to wait for Part 2 for that answer - this started turning into a massive single post, so I'm breaking it up into two. We'll dive into some ways that phasing can actually make sense, how to handle all this within your larger financial picture, and smart things you can do to help your future self.
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